An Accountant or a Bookkeeper?
There is a fairly big blurred line overlapping the roles of the Bookkeeping world and the Accounting world. Noting that neither term (“Bookkeeper” or “Accountant”) are protected words, in Australia. What this “non protected” means is that anybody can call themselves either title without any qualification or certification.
It is also fairly widely accepted and acknowledged that the roles of a Bookkeeper and an Accountant can and do overlap. Many accountants include the role of some, if not all, bookkeeping services in the list of services they offer and many bookkeepers provide services that would overlap into the areas that many consider “accounting work”.
A further factor in the blurring of the lines is the broad range of services that either could provide and that while one bookkeeper or accountant may provide services A, B, C, D & E another person who calls themselves exactly the same thing may provide services D, E and F. Accordingly a business looking for either should understand what role or services they are seeking and then ensure that whomever they are talking to can and does provide those services.
The real question for a business is “What part of my business do I need assistance with?”
Typically a business requires assistance with;
- business processes (sales, purchases, banking, payroll, inventory management maybe, time billing/costing maybe)
- Business transaction recording
- Reporting and reviewing performance
- GST and BAS compliance
- Employment requirements
- Planning and Budgeting
- The use of software to achieve some or all of the above
- Income Tax law
|Bookkeepers, in general, can assist business with all aspects of all of the above, with the exception of H: Income tax law.Accountants, in general, can assist with all aspects of the above, but tend not to get specifically involved with the intricacies of A: Business Processes nor B: Business transaction recording. Also they can’t do Income tax law unless they are also a registered Agent.Larger businesses are subject to far more rigorous reporting requirements and typically the statutory reporting requirements of such businesses are provided by appropriately educated and experienced accountants. Smaller business does not typically require Statutory reporting.|
The legal restrictions
Then comes the impact of the Tax Agent Services Act 2009 which restricts the services that some people can provide:
- a Registered BAS Agent can provide Advice, Certainty and represent a business to the Tax office on any matters that are a defined “BAS Provision”, which includes GST, PAYG Withholding, payment of PAYG Instalments, payment of FBT, WET, FTX, LCT .
- a Registered Tax Agent can provide Advice, Certainty and represent a business to the Tax Office on any matters of Tax Law which includes the “BAS Provisions”. (Note the overlap)
Typically an Accountant is also a registered Tax Agent, but not always and typically a Bookkeeper may be a registered BAS Agent, but not always.
With the implementation of the TASA 2009 the terms Tax Agent & BAS Agent have in some places become aligned with Accountant and Bookkeeper respectively, however this is a mistaken position and incorrect. Neither an Accountant nor a Bookkeeper can provide Tax Services nor BAS Services unless they are registered to do so.
If you are not registered you may still provide accounting services and bookkeeping services! Where is the line? It is about the “Advice” or “provision of certainty (Ascertain)” or “represent to the commissioner” that means a person crosses the line into needing to be registered. There is much bookkeeping work and much accounting work that is NOT BAS or Tax related.
Now about doing bookkeeping – what is it?
Typically a business should look for a person providing bookkeeping services when they are looking to establish their business processes. Bookkeepers are typically experienced in the intricacies of how to use business process software to “do the business” and have the bookkeeping/accounting records created at the same time.
Typically bookkeeping services include the verification that the records are correct and complete. Typically also providing reports for management and operational purposes. These reports tend to also be the final reports for BAS purposes and the provision of information heading for income tax purposes.
Somewhere in this verification and reporting process the term “accounting services” kicks in and overlaps. Accounting typically referring to the verification and reporting on the records and moving into then applying the income tax law.
When do you choose a bookkeeper and when do you choose an accountant?
It depends on the person/the firm and not the title that hangs on the door. It depends on the services the business is needing and whether the person is suitably experienced and skilled to provide those services.
Is an accountant or bookkeeper better suited for first time business owners? Both. A first time business requires assistance in understanding and setting up their business processes so that the business process makes sense from a bookkeeping point of view, let alone a business point of view.
They also require assistance to ensure they have understood how the world of GST impacts their business, how employment obligations impact the business and how Income Tax Law impacts their business.
As I have described that Income Tax typically is outside of the scope of those normally termed “Bookkeepers” then the “Accountants” are typically involved.
Why is it worth using a registered bookkeeper?
There is no real thing as a “Registered Bookkeeper”. A “Registered BAS Agent” is registered with the Tax Practitioners Board and then is able to provide certainty, advice and represent a business to the Commissioner about BAS Provisions.
A “Certified Bookkeeper” is a member of the Institute of Certified Bookkeepers who has met certain education and experience or competency requirements. For a business to use a “Certified Bookkeeper” provides that business with a level of security and knowledge that their bookkeeper has been reviewed by others, that they are required to maintain levels of education, currency, competency and that they have access to support and resources that would not be available to an unconnected bookkeeper.
Source: The Institute of Certified Bookkeepers